India’s new labour codes, enacted in 2019 and 2020, are being implemented amid sustained opposition from trade unions and workers’ organisations. While much attention has focused on their impact on organised sector workers, the more serious and less discussed consequences concern unorganised workers — over 90% of India’s workforce and contributors to nearly two-thirds of GDP. As States such as Tamil Nadu deliberate on notifying rules under the Social Security Code, the risks these codes pose to informal workers merit urgent scrutiny.
How the Labour Codes Were Enacted
The four labour codes — on industrial relations, wages, social security, and occupational safety and health — were passed without tripartite consultations at the Indian Labour Conference, traditionally the institutional space for dialogue between workers, employers and governments. This departure from established labour lawmaking norms has shaped both the content of the codes and the resistance they have generated.
The Union government presents the codes as instruments of “consolidation” and “universalisation” of labour laws. In practice, however, consolidation has meant dilution, and universalisation has largely bypassed informal workers.
Unorganised Workers and the Myth of Universalisation
Unorganised workers find limited mention across the four codes, except in the Social Security Code. Even there, entitlements are framed vaguely as “welfare schemes” rather than enforceable rights. At the same time, several sector-specific protections that directly benefited informal workers have been weakened or repealed.
A prominent example is the Building and Other Construction Workers Act, 1996, which contained nearly 180 detailed rules on safety, health, and welfare. These safeguards are conspicuously absent in the central rules framed under the Occupational Safety, Health and Working Conditions Code.
Occupational Safety and Health: A Regulatory Retreat
The Occupational Safety, Health and Working Conditions Code replaces physical inspections with web-based mechanisms, undermining enforcement in hazardous sectors such as construction, mining and agriculture. This shift conflicts with International Labour Organization Convention 81, which India has ratified and which mandates effective labour inspection systems.
Equally concerning is the absence of any serious engagement with occupational diseases common among informal workers — silicosis in construction, cancers linked to pesticide exposure in agriculture, and chronic ailments among salt workers. This neglect violates ILO Convention 161, which calls for comprehensive occupational health services, including identification and rehabilitation of work-related illnesses. With informal workers excluded from Employees’ State Insurance coverage, the codes leave them without institutional recognition of occupational health risks.
Social Security Code and the Erosion of Welfare Boards
The Social Security Code centralises welfare architecture by proposing a single welfare board for all unorganised workers, with limited sectoral differentiation. This ignores the diversity of informal employment and threatens existing sector-specific welfare boards that provide pensions, maternity benefits, and educational assistance.
In Tamil Nadu, for instance, 39 welfare boards established under the Tamil Nadu Manual Workers Act, 1982 face possible dissolution. The Code contains no saving clauses to protect these institutions. Additionally, the abolition of sectoral cesses following GST reforms, without alternative funding mechanisms, means there are no assured resources for informal worker welfare.
Centralisation, e-Shram, and Control over Funds
The centralised e-Shram portal registration system further shifts control away from States. In construction alone, welfare funds accumulated over years — estimated at around ₹1 lakh crore — risk being effectively appropriated by the Centre. This raises concerns about fiscal federalism and the future of State-led welfare models.
Federal Responses and Political Choices
Some States, including Andhra Pradesh, have already closed welfare boards in response to the codes. Others, like Kerala, have resisted implementation. Tamil Nadu’s hesitation reflects its long-standing labour welfare tradition and the scale of informal employment — nearly three crore workers, with two crore registered across welfare boards.
What to note for Prelims?
- Unorganised workers form over 90% of India’s workforce.
- Labour Codes were enacted without Indian Labour Conference consultation.
- BOCW Act protections diluted under OSHWC Code.
- Social Security Code centralises welfare boards.
What to note for Mains?
- Examine how labour law consolidation has affected informal workers’ rights.
- Discuss the implications of centralisation for labour welfare and federalism.
- Analyse India’s labour codes in light of ILO conventions on inspection and occupational health.
The labour codes mark a decisive shift away from a rights-based approach to labour welfare, particularly for informal workers. What is at stake is not merely regulatory simplification, but the erosion of long-built institutional protections that recognised livelihoods, safety, and dignity as matters of right rather than discretionary welfare.
